Osborne is stuck on a great tax escalator – and it’s only going up

Mr Osborne has reset the tax system to keep more money coming in for years to come. (Photo: Getty Images)

Today's paper column:With no party prepared to cut state spending radically, families will continue to feel the pain.

Those who took a foreign holiday this Easter may have whiled away the hours in the departure lounge by studying the small print of their booking – in particular the bit detailing the extortionate taxes attached to the cost of their flights. It’s always a cough-splutter moment (and air passenger duty has gone up by a further eight per cent this month).

Yet it’s not just the hidden costs of a holiday. Families know that wherever they turn, they are paying more, and will continue to do so. The Budget might have attracted derision for reducing the top rate of tax, but its actual message was the opposite: one of perpetually rising taxes, stretching far into the future. The fiscal challenge facing this Government, and those that will follow it, gets tougher, not easier. Indeed, we should ask ourselves why so many of our politicians find it easy to get exercised about tax cuts that are marginal in fiscal terms, when they should be steaming about how taxes are rising relentlessly for those on middle incomes, who form the backbone of the economy.

The full extent of the problem was set out in the Office for Budget Responsibility’s report on fiscal sustainability, updated last month. For those who dream that we might soon return to those rosy pre-crisis assumptions about the ideal ratio between debt and GDP, how much the state should take out of the economy, and what the ceiling should be for income tax, the message is one of unrelenting gloom. George Osborne proclaims himself to be a low-tax Conservative – and he is, no doubt – but when it comes to what he might be able to do about it between now and 2015, the facts stack up against him. He is trapped on a great tax escalator, and it only goes up.